To coin a phrase from Malcolm Turnbull, “With friends like Europe, Australia does not need enemies”.
That may sound harsh, but investors need to understand that the updated policy settings of the European Central Bank (ECB) that were announced last week have set world financial markets on a manic course. From an Australian perspective it has placed another roadblock in the way of the $A undertaking a much-needed devaluation and it has corrupted the ability of the Reserve Bank of Australia to adjust our interest rates. The recent and sharp decline in the iron ore export price (our largest export) should result in a declining $A. But, alas, the ECB has potentially halted this – at least for a short period.